NEW DELHI: In a sensational case, CBI has booked unknown officials of National Stock Exchange (NSE), Securities Exchange Board of India (Sebi), promoter of stock-trading company OPG Securities Sanjay Gupta and an economist and former consultant in the finance ministry, Ajay Narottam Shah, for manipulating NSE software to get prior access to the markets after opening, ahead of other brokers by some seconds, to make gains in the trade.Gupta, his brother-in-law Aman Kokrady and Shah, a data cruncher cum researcher, allegedly connived with unidentified NSE and Sebi officials to access market feed in advance between 2010 and 2014, allowing them to gain in the trading.
About Shah, CBI says, he had collected NSE trade data in 2005-06 under the garb of doing research and was instrumental in exploitation of NSE architecture.
After filing a case, CBI teams conducted raids at multiple locations in Delhi, Mumbai and Bangalore.It is alleged that Sanjay Gupta abused the server architecture of NSE in criminal conspiracy with unknown officials of NSE.
The officials provided unfair access to OPG Securities using the co-location facility (wherein the brokers computer is located in the same area as the server of stock exchange) during 2010-14 that enabled to log in first to the exchange server of the stock exchange that helped to get the data before any other broker in the market, the FIR said.Even a split second faster access is considered to result in huge gains for any stock trader, said the agency.The co-location offered by the NSE facilitates low latency and fast execution to trading members, it added.
Till 2014, information was disseminated by exchange server to the brokers attached with co-location facility through tick by tick (TBT) based system architecture, wherein the one who connected with the server first will get all market feed.In 90 per cent of cases, it emerged that Gupta was the first to log in, the officials said which prompted murmurs in the brokers circuit, resulting load balancer being introduced by NSE.
Gupta managed the data centre staff of NSE to get connected to the back-up servers, which had zero load and provided far better and faster access to market feed to OPG Securities in comparison to other brokers, CBI alleged.When Sebi started an inquiry in the matter, he allegedly paid bribe to its officials as also those from NSE.Gupta also directed his employees to delete some important mails, text messages, logs etc related to co-location facility with the intention of destroying electronic evidence against him and the company, the FIR alleged.After collecting NSE trade data, he passed it on to private persons who in turn developed an algorithm software named Chanakya.
It was Shah who had sold the software of OPG Securities.